Iran insists on 'right' to raise oil output

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Iraq has the world's fifth largest oil reserves behind Venezuela, Saudi Arabia, Canada and Iran

Iraq has the world's fifth largest oil reserves behind Venezuela, Saudi Arabia, Canada and Iran (AFP Photo/HAIDAR MOHAMMED ALI)

Vienna (AFP) - Iran will not bow to pressure to avoid increasing its oil output following the lifting of sanctions despite slumping crude prices, its oil minister insisted on Thursday.

"We don't accept any discussion about the increase of Iranian production after lifting the sanctions," Iran's Oil Minister Bijan Zanganeh told reporters on arrival in Vienna, which is hosting Friday's meeting of OPEC.

"It's our right" to pump out more crude, he added.

Zanganeh said the aim was to first increase output by half a million barrels a day beginning early next year, eventually rising to one million barrels extra which will bring its daily total to around 3.8 million.

With oil prices falling heavily on Wednesday, having already slumped by more than 60 percent in around 18 months, Iran is facing pressure from within the Organization of the Petroleum Exporting Countries and outside OPEC not to raise output.

"It's not acceptable, it's not fair," Zanganeh said Thursday. "It's not a matter of discussion with anyone to limit the level of production of Iran."

Despite a supply glut keeping crude prices around $40-$45 a barrel, Iran has consistently said it plans to up its output when nuclear-related sanctions are lifted under a deal agreed in July with world powers.

Iran, which saw its exports slip under sanctions and Western pressure on buyers to steer clear of the Islamic republic, is intent on reclaiming lost market share.

Analysts meanwhile expect OPEC -- whose 12 member nations from the Middle East, Africa and Latin America pump out about one third of the world's oil -- to leave its daily oil output ceiling at 30 million barrels at Friday's meeting.

Nevertheless, it may agree to trim excess production in a bid to support prices and in turn producers' revenues.

According to a survey by Bloomberg, OPEC production in November rose to 32.12 million barrels per day.

"We have no responsibility for the situation that is in the market," Zanganeh said.

"Iran has no responsibility in this (price) drop, this is the responsibility of the OPEC member producers and others who have produced more than the (OPEC) ceiling."

OPEC, under pressure from cartel kingpin Saudi Arabia and other Gulf state members, has defied calls to cut output despite the low oil price, extending what is now a year-long strategy of attempting to preserve market share and fend off competition from oil extracted from North American shale rock.

"It seems that the level of shale oil hasn't decreased but it hasn't increased significantly," said Zanganeh.

"But the OPEC member countries have lost so much money and it doesn't seem we can change the situation in the short term."

OPEC official policy has caused much friction within the cartel, with poorer members such as Venezuela suffering badly from a collapse in income.

New York crude had tumbled Wednesday under $40 per barrel for the first time since August after another sharp rise in US stockpiles and production, suggesting demand remains sluggish.

Brent had meanwhile slumped close to its lowest level since March 2009.

However, the market rebounded Thursday on the eve of the OPEC gathering.

At 1200 GMT, US benchmark West Texas Intermediate for delivery in January rose 68 cents to $40.62 a barrel, from Wednesday's close.

Brent North Sea crude for January rallied $1.10 to $43.59 per barrel.